When Hiring an Accountant Makes Sense
You may rely on DIY accounting software, your company’s office manager or another in-house method for keeping your company’s everyday books. However, when you’re making major changes to your business or facing significant financial challenges, relying on your own accounting skills or the efforts of someone who is not an accountant can be penny wise and pound foolish. Under such circumstances, hiring an accountant frequently just makes sense.
Your company’s business plan is one of the most important documents you will ever create. Along with providing an outline of your business structure, services and/or products and its mission, a business plan also represents a financial roadmap for your company. Laying out the finances and projections for your business is an essential aspect of writing a good business plan. Hiring an accountant during the process of writing your business plan can enhance the accuracy of your financial projections.
Likewise, obtaining capital is often necessary to expand your company’s operations or simply to keep the doors open and the lights on. When you are seeking a loan or line of credit, contracting the services of an accountant can ensure that you present your best possible financial face to prospective lenders, enhancing your chances of obtaining a positive response.
Altering Your Company’s Business Structure
Many businesses begin their lives as sole proprietorships or partnerships. However, as your business progresses, you may decide to form a limited liability company (LLC) or incorporate your company. However, such changes often have unforeseen legal and financial consequences. Seeking the advice of an accountant (as well as an attorney) before making changes in your company’s structure can help you avoid expensive mistakes that can adversely affect your company’s bottom line.
Business Mergers and/or Acquisitions
Just as when you are considering a change in your business structure, consulting an accountant before executing a merger or acquisition is a savvy move. Especially if the merger or acquisition is complex, an accountant can provide essential advice about whether the merger or acquisition is a good move for your company. He or she can also provide guidance about the best course of action if you decide to go ahead with the merger or acquisition.
Changing Management Roles
If your company is growing rapidly, you may find that maintaining total control of day to day operations is beyond your capabilities. As a result, you may decide to hire one or more senior management personnel. Or you may simply need to hire significant numbers of workers to conduct day-to-day operations. An accountant can help you determine the amount of compensation and benefits that your company can afford – translated into making the proper number (and types) of new hires for your company.
Likewise, if you’ve decided to step down (or at least to step back) from day-to-day operations, an accountant can help assure that you obtain the best possible financial deal. Similarly, if you sell your business or close up shop, hiring an accountant is essential.
Facing an Audit
Receiving the dreaded letter from the IRS can be an unsettling experience, even if you and your company conduct business completely above board. Especially if you’re facing an in-person audit at an IRS facility or on your company’s premises, it is needlessly foolhardy to consider facing an audit without professional assistance. Even if your company is facing a relatively uncomplicated correspondence audit, it can’t hurt to have an accountant examine the audit letter – and especially your response – before you submit your response to the IRS.
Choosing the Right Accountant
Your cousin Joe who majored in accounting in college may offer to check out your company’s books for a rock bottom price. Resist the temptation. Relying on cut-rate accountant services is no better than performing the work yourself, and can even be worse – at least you’re familiar with the workings of your company. On the other hand, most small business owners don’t need to take on the expense of hiring a big name accounting firm.
Instead, seek an accountant (or accounting firm) that specializes in your industry. Check out the accountant or company with the Better Business Bureau and other oversight agencies. Ask for references and follow up. And all other factors being equal, you should opt for a certified public accountant (CPA) or certified management accountant (CMA) rather than someone who lacks that particular certification.
Disclaimer: This article describes general circumstances concerning obtaining the services of an accountant to conduct a company’s financial dealings. It is not intended to provide financial advice. Please consult with a financial professional in your area with specific question concerning your company’s financial circumstances.
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